City Council Scrutinizes Streetcar Budget Fixes

At a Budget and Finance Committee meeting
on May 13, City Council members grilled City Manager Milton Dohoney Jr.
on how the city will fix the streetcar project’s $17.4 million budget
gap and whether paying for the cost overrun to save the project is worth
it.

Supporters of the streetcar pushed
questions and comments that suggested the streetcar will provide the
city with a large return on investment, which was supported by Dohoney’s
testimony and previous studies from HDR, a consulting firm, and the
University of Cincinnati. Opponents suggested the overruns have made the
project, which now stands at an estimated $133 million, too expensive.

In a memo issued April 30, Dohoney recommended various capital funding sources
to fix the streetcar budget gap, including a temporary reallocation of
Music Hall renovation funds and money that would have otherwise gone to
infrastructure projects around the Horseshoe Casino.

Still, there are a few remaining
uncertainties. Dohoney said he doesn’t know for certain whether Messer,
which responded to the city’s bid process with the lowest construction
bid, is still willing to contract with the city under the terms it
previously offered. He said Messer officials have indicated they are
still interested, but it remains uncertain until a contract is signed.

Another uncertainty is exactly how much
laying down the tracks will cost. Dohoney said it won’t be possible to
gauge the exact cost until Messer or any other company contracts with
the city and begins actual work on the project.

For those situations, Dohoney said the
project has a $10 million contingency fund available, as required by the
federal government.

The city is also working with the federal
government to obtain another $5 million that could be used for
contingency or to undo some of the overrun fixes being looked at, but
federal officials are waiting to see how the city government reacts to
the current cost overrun problems before a decision is made, according
to Dohoney.